The heads of both Amfori, formerly known as the Foreign Trade Association (FTA), and EuroCommerce, have warned that the complexity of rules of origin is blocking trade growth, particularly for small and medium enterprises (SMEs).
Speaking at a conference organised by the groups yesterday (6 September), both Amfori and EuroCommerce warned that unless rules of origin for products are improved, they will continue to discourage European companies, particularly small ones, to take advantage of hard-won concessions in trade agreements.
Rules of origin determine the “nationality” of a product. To benefit from global value chains, companies need clear rules, but the complexity of rules of origin – preferential and non-preferential – continues to discourage trade, in particular for SMEs. The often very different rules in each of the many bilateral trade agreements signed in recent years adds to what is already a confusing picture.
Amfori president, Christian Ewert, said both organisations have, for many years, said origin rules need to be simplified – ideally at the global level – and regularly updated so that they properly reflect modern global value chains.
“This should include wider rules for cumulation and less stringent rules for granting preferential origin,” he added. “Without these improvements there is a definite risk that the benefits of trade agreements will continue to be only partially adopted and even a risk to the future of new trade agreements entirely.”
EuroCommerce director general Christian Verschueren concurs: “Even the most beneficial trade agreements have little effect if the rules of origin are too complicated. There is definitely something wrong when small companies, but also some big enterprises prefer to pay import duties rather than dealing with a set of different rules of origin.
“There is an urgent need for a modernised system which recognises that we are operating in a world of global supply chains, where complex products are made up of parts from all over the world.”
These problems, including those connected to cumulation, which should allow production across more than one country, mean that companies will only partially be able to take up the benefits of trade agreements, the organisations say.
Meanwhile, on top of these difficulties, under the recently-adopted Registered Exporters System (REX), that replaces the certificate of origin Form A, importers now run the risk of being held liable for any incorrect information provided by the exporter on the origin of a product.
“This approach should be revisited to find a more balanced set of rules on an importer’s burden of proof when dealing with customs authorities in the EU,” they add.